Financial Advisers

07/09/2010

Q: What's the best way to find a good estate lawyer to prepare my will -- one who knows what he's doing, and won't overcharge for his service? -- BL via email

A: This isn’t as difficult a task as many people believe - but you do have to be willing to invest at least as much time locating a lawyer as you would spend shopping for a car.

Bear in mind that law is a highly specialized profession. If you’re looking for expert assistance to create your will or a trust for a loved one, or you need legal help administering an estate on which you’ve been named executor, you definitely want an estate lawyer -- not a terrific matrimonial, real estate, or criminal lawyer who occasionally draws up wills.

Here’s a five-step process for finding a good lawyer:

1. Ask for recommendations from friends, colleagues, and professional sources like your tax accountant. That should start you with a short list of names. (If you’re new in town, skip this step and go straight to step #2.)

2. Look up these names in the Martindale-Hubbell Law Directory. It provides basic biographical information about most practicing attorneys. It also give you links to their websites, where you can learn more about them and their practices. If you’re starting from scratch, search the Martindale-Hubbell directory for estate lawyers in your city and/or your zip code. (You can do similar searches at this site for every type of legal specialty.)

In many cases, Martindale-Hubbell gives you a letter-rating for the attorney's ability and standing in the legal community. A means "very high to pre-eminent"; B means "high to very high"; and C means "fair to high." These ratings are based on confidential input Martindale-Hubbell has received from other lawyers and judges.

You really can't draw any conclusions if there’s no letter rating next to a lawyer’s name -- nor should a rating be your only reason for hiring someone. But if a lawyer is recommended by friends or colleagues and is also highly-rated, you can be confident that he or she is a knowledgeable practitioner.

3. Telephone the most promising prospects and ask for a preliminary consultation. Also ask if there's a consultation fee. Sometimes there is, sometimes there isn't. If there is, ask if the fee will reduce your total bill should you decide to hire the lawyer.

This preliminary meeting doesn't commit you to anything. It's an opportunity for you to describe what you want to accomplish, to hear what the lawyer recommends, and to learn what he or she charges. Last, but by no means least, it's a chance to find out how well you click. Don't hire an attorney you’re not comfortable with, regardless of his or her expertise.

4. Before the preliminary consultation, think about what questions you want to ask. (Among other things, the way the lawyers answer will help you make your choice.) One way to prepare is to read the short, easy-to-understand Nolo Press articles about wills, trusts, and estate planning, at www.nolo.com.

Some attorneys mail you a questionnaire to fill out and bring with you. For a consultation about estate planning, "I always suggest that people bring a list of their assets and copies of their current will and power-of-attorney, if they have one," says Stephen J. Silverberg, a New York estate lawyer who is currently president of the National Academy of Elder Law Attorneys.

5. When you’ve chosen a lawyer, ask for an engagement letter that spells out the services to be provided, and the charges for those services. "You want to know everything upfront -- there should be no surprises," says Silverberg.

There is no standard legal fee. The cost depends partly on what you need; partly on the attorney's overhead and reputation; and partly on what other lawyers in the area charge for similar work. It also depends on the size of the firm. A sole practitioner won’t charge the same fees as a 100-attorney firm. One reason to comparison-shop is that it will give you an idea of the range of the fees in your community.

Expect to pay part of the fee in advance, and the balance when the job is finished.

Please send your questions to Lynn@LynnBrennersFamilyFinance.com.I'm sorry I can't respond personally to every email. Questions are only addressed online.

09/23/2009

Q: My husband recently died. I want to be certain that my three children will inherit my house, which my husband built himself. My will leaves them everything I own. One of my sons recommends that I see a lawyer specializing in elder law. I am 78 years old and in good health. My monthly income from my pension and Social Security is about $1,800. A one hour elder law consultation will cost me $425, and I'm required to divulge my bank accounts, fixed annuity, IRA, and whatever other assets I have. But friends have told me elder lawyers would be adding charges that could go into the thousands. Won't my will suffice? Must I get involved with elder law? -- VT via email

A: The consultation won't commit you to paying anything except the $425 consultation fee. The lawyer will tell you what additional services would cost. It's up to you whether or not you want to proceed.

Anything you tell him is confidential, privileged information. You don't have to take your kids along to this meeting; but if you do, you can ask them to leave the room before discussing your finances. No experienced elder lawyer will expect you to divulge your assets in front of your children!

Is your will enough? Maybe, maybe not. Here's the potential flaw in your current estate plan:

Your will leaves the house to your children. But your son may be concerned that if you ever need nursing home care, the house might have to be sold to pay for that care. He probably hopes that an elder lawyer -- an attorney who specializes in estate planning, wills, trusts, and arrangements for long-term care -- can suggest a way to make sure that, if necessary, Medicaid will pay for your care without requiring the sale of the house.

Or he may hope the lawyer will assure him that you have sufficient savings to cover the cost of your care without having to sell the house.

There's nothing to panic about. You're in good health, and you may never need nursing home care. And if you ever do, you might decide that you prefer to sell the house to pay for your care rather than depend on Medicaid.

But all you need to decide at the moment is whether it's worth
$425 to learn if there's a way to be certain
your kids inherit the house your husband built no matter what happens. Whether or not you act on what you learn is another matter. And that, too, is entirely your decision.

Please send your
questions to Lynn@LynnBrennersFamilyFinance.com.I'm sorry I can't respond personally to every
email. Questions are only addressed online.

08/27/2009

Q: I have a small pension and Social Security benefit, and modest savings. I'm worried about how I'll be able to afford my living expenses in retirement. I'm not sure what financial decisions might help me. Where can I turn for good day to day financial planning advice? -- BS via email

A: You're not alone. Millions of Americans share this dilemma.

It's not easy for the average person to find a financial adviser who is objective, qualified, and affordable. But it isn't impossible.

In addition to looking for a financial planner, you should use your telephone and computer to find out about every social service and discount that might be available to you. Many cities have a department of aging or department for the elderly, which is a good place to start. You should also check the bulletin boards and speak to the staff at local senior centers and public libraries.

Before we get to specifics about locating a good financial adviser, let's fill in the basic background.

Most people are surprised to learn that there's no government license for financial planning. But there isn't.

Anybody can call himself a financial planner -- and every financial salesman does. The advice you get from a salesman isn't necessarily bad -- many salespeople are very knowledgeable -- but it's always part of a sales pitch. You can't expect objective advice from someone whose compensation depends on selling you products.

So it's essential to ask how an adviser is paid. There are two basic forms of compensation:

Some advisers are paid by fees. These can be hourly fees, or pre-determined amounts for specific jobs (like creating a financial plan), or an annual percentage of the assets the adviser manages for you.

Other advisers are paid by commissions; they earn a percentage of the price of the products or investments that you buy from them.

And some advisers earn a combination of fees and commissions. They might charge a flat fee to create an investment plan for you, for example, and then earn commissions by selling you products to implement the plan.

Advisers paid by commission often seem more affordable. One reason is that their commissions are usually invisible: They're added to the price of the product. But there are two good reasons you should prefer to pay fees. First, you won't have to wonder if the adviser is recommending something that's better for his finances than it is for yours. And second, you'll know exactly what you're paying for the advice. Invisible commissions are sometimes much much higher than people realize.

What about the adviser's qualifications?

Look for a Certified Financial Planner. The CFP designation isn't a government license. But a CFP must pass a comprehensive two-day exam and meet a continuing education requirement, and has agreed to abide by a written code of ethics.

In brief: for unbiased, reliable advice, you should look for a fee-only CFP.

And that's a problem for the average consumer. Most fee-only CFPs are investment managers; many won't take a client unless he is bringing them a few million dollars to manage.

But most people don't need a money manager. They need the equivalent of a financial check-up: a consultation with an expert who charges an hourly fee for knowledgeable, objective advice that they can implement themselves.

And there are some CFPs who specialize in doing just that: Their clients are people in need of expert advice to help them make difficult financial decisions, and/or periodic check-ups to make sure they're on the right track.

Many of these advisers are members of the Garrett Planning Network (GNP), a nationwide network of independent, fee-only financial planners established by Sheryl D. Garrett, a Shawnee, Kansas adviser.

GNP members are generalist financial planners; but they come from a wide range of backgrounds, including tax accountancy and insurance as well as investment management. You'll find a map to help you locate GNP members in your area here. (The GNP site lists advisers geographically, and by different types of expertise, including college, tax, retirement, and divorce planning, employee benefits, and corporate severance plans.)

On average, GNP advisers charge about $175 an hour; but depending on their background, credentials, and location, their hourly fees can range from $100 to $360.

In most cases, they ask prospective clients to fill out a questionnaire and come in for a free 30 to 45 minute `get acquainted' meeting. That gives you a chance to explain what you're looking for, find out what the adviser can do for you, and ask how much it will cost, before you commit yourself to anything. It also gives you a chance to get a sense of whether you can work with this person.

Don't underestimate how important that is. It's essential that you feel comfortable. If you think you'd feel foolish asking questions, or pushing for a more detailed explanation, this isn't the right person for you no matter how expert he seems.

You don't have to make an immediate decision. Hiring someone to give you financial advice is a serious matter, and you're entitled to take your time. (If you feel awkward about this, say you promised not to commit yourself before discussing the matter with your son, daughter, or best friend.)

Finally, when you hire any adviser, it's a good idea to ask for an engagement letter that spells out the services he'll provide and what they'll cost. This letter tells you what to expect -- and it protects both of you from misunderstandings.

Note to Readers: My article about strategies that can boost your Social Security income in the Sept/Oct issue of AARP Magazine has drawn a great many questions. I'll be addressing those questions here in the coming days and weeks. Meantime, you can read the article here. And you'll find my AARP Magazine article about how to push the reset button on Social Security if you regret having taken it early here.(c) Lynn Brenner, All Rights Reserved